Unlike motor vehicle insurance, homeowner’s insurance is not required by law. However, if you purchased your home with a mortgage, your lender likely required you to buy a homeowner’s insurance policy to protect their investment in case of a fire or natural disaster. It’s important coverage to have—even if you own your home free and clear—and you may even be able to reduce your annual premium once you understand the factors that generally affect homeowner’s insurance rates.

Your home’s age and construction.

When setting a homeowner’s insurance rate, the insurer estimates how much it will cost to rebuild the property in question should it be damaged or destroyed. Materials and features common in older homes—such as hardwood floors and ornate details—cost more to repair and replace. Whether the exterior was constructed out of brick or wood will also factor into the cost, as will the age of the electrical, heating/cooling and plumbing systems. Upgrades reduce the likelihood of loss and often lower homeowner’s insurance premiums.

Pools and hot tubs on the property.

If your home includes a swimming pool, spa or hot tub, your homeowner’s insurance is going to be more expensive because additional liability coverage will be required. While most policies include a minimum $100,000 in liability protection, your insurance agent may recommend increasing it to between $300,000 and $500,000 as well as adding an umbrella policy with at least $1 million in protection. If you want to minimize your homeowner’s insurance costs, avoid purchasing properties without outdoor pools and hot tubs.

The location of the nearest fire department.

Direct property loss as a result of home fires has been estimated at $7.3 billion annually. If your home is near a fire department (or even a fire hydrant), you’ll pay less for your homeowner’s insurance as a result. Homes in urban and suburban areas usually have better fire protection than those in rural areas as well. So if you want to keep your homeowner’s insurance costs as low as possible, consider location when buying a home.

The location of the nearest body of water.

If your home is near a coastline, large body of water, or in a floodplain, you’re going to pay higher homeowner’s insurance premiums. Depending on your location, your policy may have a separate deductible for hurricanes and windstorms. And flood damage—from any exterior source—is not covered by standard homeowner’s insurance policies. You’ll need a policy specifically for flood insurance if you’re in a high-risk area.

Your past insurance claims history.

Even if you’ve purchased a new home and changed insurance companies, any claims you made at your previous residence will be considered when setting your homeowner’s insurance rate. Insurers can access this information through the Comprehensive Loss Underwriting Exchange, which reports filed claims for seven years. In general, the amount of the claim carries more weight than the reason for the claim.

Whether you’re in the process of looking for your next home or just want to explore ways to lower your current homeowner’s insurance rates, your insurance professional is your best resource for information on these and other factors that will affect your premium.